Nikkei drops, pressured by stronger yen, Wall St losses - FINANCIAL-24
TOKYO: Japan's Nikkei share average slumped on Tuesday as losses on Wall Street and a stronger yen sapped sentiment.
The Nikkei was down 0.7 percent at midday at 20,026.45, moving away from Friday's high of 20,239.81, which was its loftiest level since August 2015 and came after it finally broke through resistance at the 20,000 level.
"Hopefully, 20,000 will now act as a support level after the Nikkei has been over it for a while," said Gavin Parry, managing director at Parry International Trading Ltd.
But U.S. stocks edged down on Monday and a stronger currency also weighed on Japanese shares. The dollar was down 0.6 percent at 109.76 yen, skidding to six-week lows despite wide market expectations that the U.S. Federal Reserve will raise interest rates at its June 13-14 meeting.
"The dollar decisively broke under the 110-yen level, which is making investors concerned," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. "Still, market participants expect the Bank of Japan to come in and buy ETFs if the selloff accelerates, as it does to put a floor under the market."
Economic data out on Tuesday added to the downbeat mood. Japan's real wages were flat in April from the same period a year earlier, with rising prices offsetting gains in nominal pay and possibly hurting households' purchasing power.
"You've got destruction of domestic purchasing power, it's as simple as that. But on the other hand, you also have the expectation that the Bank of Japan won't move from its easy monetary policy," Parry said.
The oil and coal subindex of the Tokyo Stock Exchange slumped 0.3 percent and the mining subindex shed 1.2 percent, as oil prices skidded on concerns that a political rift between Qatar and several Arab states would undermine an OPEC-led push to tighten the market.
Among the broader market downturn, some stand-out shares managed to gain on individual factors.
Shares of Toshiba Corp were up 2.1 percent after the Asahi newspaper reported the beleaguered electronics giant was considering giving U.S. chipmaker Broadcom Ltd the exclusive rights to negotiate to buy its prized chip unit.
Pigeon Corp's shares were 4.2 percent higher after the maker of nursing and childcare products posted higher earnings and an upbeat outlook on Monday.
Shares of Japan's Oomitsu surged 25.2 percent after the packaged foods distributor said on Monday that it will conduct a two-to-one stock split on July 1 for shareholders on the register as of June 30.
The broader Topix shed 0.6 percent to 1,600.13, while the JPX-Nikkei Index 400 also dropped 0.6 percent to 14,270.06.
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